a. Prepare a contribution margin by sales territory report. Compute the contribution margin ratio for each territory as a whole percent, rounded to two decimal places, if required. Coast to Coast Surfboards Inc. Contribution Margin by Territory Contribution margin ratio East Coast % West Coast % b. What advice would you give to the management of Coast to Coast Surfboards regarding the relative profitability of the two territories? The total contribution margin is sells only Atlantic Wave, which have al company's profitability, it is for the may be too high. for the East Coast, while the contribution margin ratio is for West Coast. This is because East Coast contribution margin ratio but a contribution margin per unit. In attempting to improve the that changing the mix of products to the two territories will have much effect. In addition, the variable selling expenses per unit
a. Prepare a contribution margin by sales territory report. Compute the contribution margin ratio for each territory as a whole percent, rounded to two decimal places, if required. Coast to Coast Surfboards Inc. Contribution Margin by Territory Contribution margin ratio East Coast % West Coast % b. What advice would you give to the management of Coast to Coast Surfboards regarding the relative profitability of the two territories? The total contribution margin is sells only Atlantic Wave, which have al company's profitability, it is for the may be too high. for the East Coast, while the contribution margin ratio is for West Coast. This is because East Coast contribution margin ratio but a contribution margin per unit. In attempting to improve the that changing the mix of products to the two territories will have much effect. In addition, the variable selling expenses per unit
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Territory and Product Profitability Analysis
Coast to Coast Surfboards Inc. manufactures and sells two styles of surfboards, Atlantic Wave and Pacific Pounder. These surfboards are sold in two regions, East Coast and West Coast. Information about the two surfboards is as follows:
| Atlantic Wave | Pacific Pounder | |||
| Sales price | $350 | $300 | ||
| Variable cost of goods sold per unit | (130) | (147) | ||
| Manufacturing margin per unit | $220 | $153 | ||
| Variable selling expense per unit | (150) | (75) | ||
| Contribution margin per unit | $70 | $78 |
The sales unit volume for the territories and products for the period is as follows:
| East Coast | West Coast | ||||
| Atlantic Wave | 2,660 | 1,330 | |||
| Pacific Pounder | 0 | 1,330 |
a. Prepare a contribution margin by sales territory report. Compute the contribution margin ratio for each territory as a whole percent, rounded to two decimal places, if required.
Transcribed Image Text:a. Prepare a contribution margin by sales territory report. Compute the contribution margin ratio for each territory as a whole percent, rounded to two decimal places, if
required.
Coast to Coast Surfboards Inc.
Contribution Margin by Territory
Contribution margin ratio
East Coast
%
West Coast
%
b. What advice would you give to the management of Coast to Coast Surfboards regarding the relative profitability of the two territories?
The total contribution margin is
sells only Atlantic Wave, which have a
company's profitability, it is (
for the
may be too high.
for the East Coast, while the contribution margin ratio is
for West Coast. This is because East Coast
contribution margin ratio but a
contribution margin per unit. In attempting to improve the
that changing the mix of products to the two territories will have much effect. In addition, the variable selling expenses per unit
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